Crash does not worry 'U experts

Monday's 554-point plummet of the Dow Jones Industrial Average will not have long-lasting effects on the U.S. economy or investors' portfolios, local experts and investors say.

"There will not be long-term effects," said finance Prof. M. Nimalendran. "It had an effect, but it looks like we have recovered."

The market rebounded yesterday with an increase of 337 points.

Economics Prof. Matthew Shapiro said the constant increasing and decreasing of the stock market is to be expected.

"The stock market goes down and it goes back up," Shapiro said.

Monday's crash will not permanently damage the U.S. economic climate, Shapiro said.

"In terms of consumption, it won't cause a big impact," Shapiro said. "If it falls substantially more, then it could damage the financial markets."

Another reason why the drop will not seriously harm the U.S. economy, Nimalendran said, is that the Dow Jones has increased about 20 percent since January.

"Overall, the market has been up a lot," Nimaledran said. "The prices will continue to move up and down."

University students who invest in the stock market said the crash did not cause major damage to their stock portfolios.

"I'm sure some people were hurt, but I'm not very worried," said LSA senior Felipe Martinez, president of the Michigan Economics Society. "As of now, it's OK."

However, Martinez said he is not completely confident that his stocks will continue to be stable.

"If it keeps falling, then I'll worry," Martinez said.

Some students who invest in the stock market found a bright side to Wall Street's drop.

"Every time the market drops, I see it as a good time to buy," said LSA senior Perry Ballard. "But I'm still holding out for the Fed to raise the interest rates."

The crash "did not have a tremendous effect" because his portfolio contained stocks of many small companies, Ballard said.

"The 500 points is for some of the larger companies," Ballard said.

The dramatic decrease in the value of stocks in Hong Kong and the Southeast Asian economy was one of the major causes of the market crash.

"Hong Kong had some problems with the exchange rate," Nimalendran said. "I don't think anybody in the U.S. expected this to happen."

The Dow's drop Monday triggered two circuit breakers on the New York Stock Exchange that had never been set off since they were installed after the 1987 crash. The first circuit breaker, at 350 points, closed the market for 30 minutes. The second, at 550 points, halted trading for the day.

Nimalendran said that while the stock market's future cannot be predicted, it is inevitable that "there will be a lot of volatility."

-The Associated Press contributed to this report.

10-29-97